At the close of 2023, African startups raised a total of $3.4 billion with energy solutions and FinTech leading the ecosystem.
- Kenya surpassed Nigeria, Egypt, and South Africa as startups raised close to $800 million despite significant setbacks in companies’ quarterly performances.
- Energy startup ‘Sun King’ secured $130 million to facilitate its off-grid solar sector that will enhance the strides towards green energy in Kenya.
- In June 2023, Verdant Capital invested $7 million in fintech company Mogo Kenya to expand its operations in the auto assets sector including motorbikes and tuk-tuks.
To support African startups, Kazana Fund launched Angel syndicate that brought on board more than 190 investors to make it easy for brilliant African techies to gain capital and to cooperate in solving continental problems digitally.
In February this year, industry leaders will convene the Africa Tech Summit in Nairobi where prospective tech solutions will pitch their ideas to investors. Some of the Kenyan startups on the priority list include:
- Climate Tech startup ‘Node Bio’ which was founded in 2022 provides technological solutions to tackle drought and other challenges posed by climate change.
- Tausi App launched in 2018 focuses on connecting beauty experts and customers.
- Urbanet was created in 2016 to promote urban development and ideas about decentralization.
- Peer Carbon launched in 2022 helps businesses to track their carbon footprints and actively learn how to reduce them to combat climate change.
‘Africa: The Big Deal’ reported a 39% decrease in VC funding for Africa in 2023 indicating the competitive nature of this year’s summit.
Africa has a lot of brilliant ideas that need seed funding but the capital needed to actualize the plans remains elusive.
Startups need to be more rigorous in creating blueprints for their solutions by ensuring they are pragmatic. Unlike in the years before 2021, investors are concerned about the profitability of ideas they have funded and have no qualms about abandoning declining ventures.
Winter
Venture capital funding declined in 2023 as investors all over the world retracted from the Tech scene. For this reason, last year saw a contraction of Kenyan startups with some closing operations.
Various startups in Series A and B rounds have been severely affected by the drying faucets of capital allocation leading them to devalue their ambitious projects and slash employees from their payroll.
- In March, B2B commerce startup Zumi laid off 150 employees after it was unable to raise adequate funding for its operations.
- Back in 2016, Zumi was a women’s digital magazine funded by UAE-based Majlis investments but shifted focus to e-commerce after failing to get advertising revenue.
- Later in August 2023, a delivery startup called Sendy shut down operations and sold its assets after a series of losses caused by high fuel prices and reduced orders.
The Dead End
In December, E-Commerce giant ‘Jumia’ closed its food delivery service in seven countries including Kenya. The company stated that since its inception, Jumia Food was not a profitable venture.
- In a series of cost-cutting measures, Jumia reduced its labor force and slashed services that were not vital for its operations.
- Jumia decided that they would focus on online retail and optimize their performance in that area to keep the business operational.
- In contrast, other food delivery couriers like Uber Eats and Bolt Food reported massive profits in that venture.
The month of August was a challenging moment for the startup company Cellulant after downsizing its workforce by 20%. The company which operates in 19 markets offered exit packages and extended medical covers for its departing employees to quell their sense of loss.
Data Protection
The tech industry keeps track of its customers’ internet footprints, as well as recording interactions and associations. However, global concern has arisen over claims that websites and apps are selling crucial data of their clients to other sectors.
- In September 2023, the Office of the Data Protection Commissioner fined a digital lender called Mulla Pride Limited Ksh. 9.3 million after misusing the personal contact information of their clients.
- In that same month, the Data Protection Commissioner also recommended the banning of World Coin activities for a year, as investigations were pursued on the legality of their data collection process.
- However, after talks with the government, World Coin is set to return to the Kenyan market this year with a vision of popularizing the Blockchain sector.
Internet Solutions
In July 2023, due to the growing demand for reliable internet, Elon Musk’s SpaceX announced that its satellite internet service ‘Starlink’ will be available in Kenya.
- To fully enjoy Starlink services, customers had to pay Ksh. 99 for registration and Ksh. 3,100 for shipping, and Ksh. 89,000 for the kit.
- Furthermore, a customer is charged Ksh. 6500 every month as subscription fees.
- Compared to regional internet service providers such as Safaricom and Zuku, Starlink is very expensive and inaccessible.
Internet provider ‘Karibu Connect’ later announced that they were Kenya’s first authorized reseller of Starlink Internet. The company promised to popularize the satellite internet service in both rural and urban areas. However, the company’s CEO John Thuo did not indicate whether they would make the prices more affordable.
